The document summarizes key points from a presentation given by Damian Radcliffe at Birmingham City University on November 26, 2009. The presentation covered Ofcom's role as the UK communications regulator, the state of the communications market, issues around public service broadcasting, local media, and the Digital Economy Bill. It provided an overview of Ofcom's duties and focus areas, trends in digital technologies, challenges facing public service broadcasters, and the goals and main elements of the Digital Economy Bill.

1. Presentation Birmingham City University Damian Radcliffe 26th November 2009

2. 1 Agenda About Ofcom Communications Market in the UK today Hot topic (1) – Public Service Broadcasting Hot topic (2) – Delivering news, media and information at a local level Break Hot topic (3) – the Digital Economy Bill 6. Broadcasting Code

3. 2 1: About Ofcom

4. About Ofcom Ofcom is the regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services It is independent of Government but accountable to Parliament Ofcom’s sponsoring Departments of State are: the Department for Business, Innovation & Skills (BIS) the Department for Culture, Media & Sport (DCMS) Set up - and its powers and duties defined – by the Communications Act 2003

5. Where we came from

7. Ensuring the optimal use of the electro-magnetic spectrum

8. Ensuring that a wide range of electronic communications services - including high speed data services - is available throughout the UK

9. Ensuring a wide range of TV and radio services of high quality and wide appeal

10. Maintaining plurality in the provision of broadcasting

11. Applying adequate protection for audiences against offensive or harmful material

13. 7 2: Communications Market in the UK today

15. Communications markets and the recession

16. Consumers take control of their viewing

17. Broadband sees double-digit growth in 2008

19. 10 …while take-up of all key services continued to rise Broadband and HDTV among the fastest growing services Source: Ofcom research/operators

20. 11 Time per day spent using communications services On average, consumers spent a little more time using communications services – home internet on the rise, but radio listening declines 5 year CAGR 0.1% -1.9% 21.5% -3.4% 15.2% Source: Ofcom/BARB/RAJAR/Nielsen Netratings (internet is home use only)

22. Communications markets and the recession

23. Consumers take control of their viewing

24. Broadband sees double-digit growth in 2008

26. 14 Household spend on communications fell again in 2008… In real terms, UK household average spend was £93.69 a month, down 4.7%, or £4.39, on 2007 Total

27. 15 …and more consumers are buying services in ‘bundles’ 46% of consumers now buy two or more communications services from a single supplier, up from 39% a year earlier Source: Ofcom research

29. Communications markets and the recession

30. Consumers take control of their viewing

31. Broadband sees double-digit growth in 2008

33. 15% of viewing in DVR homes is time-shifted using their recording device

34. 23% of households with home internet watch online catch-up TV

35. 15% of internet users watch programmes on the BBC’s iPlayer service

36. 52% of cable TV homes (1.8 million) accessed VoD on their television

37. On average, cable homes viewed VoD programmes 30 times per month, at Q4 2008Source: Ofcom research/operators

38. …and watch more TV they enjoy with on-demand 18 Agreement with statements on non-linear viewing Source: Ofcom research

40. Communications markets and the recession

41. Consumers take control of their viewing

42. Broadband sees double-digit growth in 2008

44. 21 Mobile broadband enters the mainstream Mobile broadband connections exceeded 260,000 in May 2009. 75% of mobile broadband homes also have landline broadband Source: GfK

46. Communications markets and the recession

47. Consumers take control of their viewing

48. Broadband sees double-digit growth

50. 24 3:Hot Topic (2): PSB “under pressure”

51. PSB purposes 25 Informing our understanding of the world - To inform ourselves and others and to increase our understanding of the world through news, information and analysis of current events and ideas 2. Stimulating knowledge and learning -To stimulate our interest in and knowledge of arts, science, history and other topics through content that is accessible and can encourage informal learning 3. Reflecting UK cultural identity - To reflect and strengthen our cultural identity through original programming at UK, national and regional level, on occasion bringing audiences together for shared experiences 4. Representing diversity and alternative viewpoints - To make us aware of different cultures and alternative viewpoints, through programmes that reflect the lives of other people and other communities, both within the UK and elsewhere

52. PSB characteristics 26 High quality - well-funded and well-produced Original - new UK content rather than repeats or acquisitions Innovative - breaking new ideas or re-inventing exciting approaches, rather than copying old ones Challenging - making viewers think Engaging - remaining accessible and attractive to viewers Widely available - if content is publicly funded, a large majority of citizens need to be given the chance to watch it

53. 27 The central challenge – the move from analogue to digital model of public service broadcasting

54. Channel shares in all homes, 1986 - 2008 Source: BARB

55. 29 Impact of Digital TV Over 90% of households now have access to Digital TV Digital Switchover means all homes will be multi-channel by 2012 Digital homes have access to around 40 channels on Freeview and over 400 channels on multichannel subscription – representing huge choice for viewers. By 2012 the 5 channel home will be moribund. For many it already is.

56. Data from Q1 2007 is basedon consumer research **** Chart using new GfK research from Q1 2007 Digital TV progress 1998-2008 Source: Ofcom

57. Market share of platforms – All sets Q4 2008 Under a third of sets remain analogue terrestrial Source: GfK research 31

58. 32 The UK TV market is experiencing a period of rapid change Penetration of digital technologies rising Audience share for the five main channels falling 78% 69% 84% 64% 51% 54% 47% 11% 2003 2007 2003 2007 2003 2007 2007 2003 Source: Ofcom Source: BARB

59. Market changes

60. 34 The growth in digital platforms is creating new opportunities for audiences Penetration of digital technologies (%) Source: Ofcom, GfK, Sky, Virgin Media. Mobile broadband includes penetration of 3G phones plus dongles

61. DVR penetration in all homes % of homes 27% Source: Ofcom Research (Technology Tracker) 35

62. BBC iPlayer online usage BBC iPlayer monthly online streams/download requests, 2008 Autumn TV schedule launches TV iPlayer launches on Virgin Media Streams/downloads (m) 36

63. Despite more choice, TV consumption is declining % growth 2002-2007 -3% -5% 295% -7% 88%

64. Total viewing hours of National News, main PSB channels only, by age group Total hours per year watched by average individual (4+) 103 28 50 195 71 143 Source: BARB, 2008

65. 39 PSBs face declining income as well as audiences Increased competition for advertising revenue from other TV channels and internet 2007 TV advertising 1993 TV advertising Other channels Otherchannels Channel 4 ITV1 ITV1 Channel 4

66. 40 Investment in UK content depends on public service channels but is already falling PSB content – excludes sport Source: Oliver & Ohlbaum Assocs

67. Spend on first-run originated output on the five main networks £2,620 Total £2,697 £3,064m £2,952 £2,848 £m Source: Ofcom/Broadcaster returns. Note: figures are expressed in 2008 prices. Figures include GMTV. 41

68. 42 4: Delivering news, media and information at a local level

70. Maintain sufficient plurality of providers

71. Licence national and local analogue and community radio stations

74. Local journalism is important because it underpins democratic participation in the UK 45 Informing Representing Interrogating Campaigning

75. Consumers value local and regional content – particularly news 46 % saying local and regional content is very important - weekly users Scores based on respondents importance rating 9/10 on a scale of 1-10. Source, Ofcom research

76. People using internet for local media more than they used to Use of local media now compared to two years ago Source: Ofcom research 47

77. The internet has also created new opportunities and business models Local and regional newspapers online Ultra-local reporting and citizen journalism Emerging hyper-local and community internet services Location based services National classified advertising vehicles 48

78. But the growth of the internet as an advertising medium has created challenges for the sector 49 Source: Advertising Association, IAB, PWC, WARC, Oliver & Ohlbaum Analysis

79. 50 The recession has placed further pressure on regional and local media Regional Press advertising revenues Cyclical Structural Current Prices (£m) Source : Advertising Association/ WARC (www.warc.com)

80. 51 The recession has put further pressure on regional and local media TV net advertising revenues £m revenue at constant prices (2000) Cyclical Structural Source : Advertising Association / WARC (www.warc.com)

81. Consumers value plurality in regionally based TV news Percentage who state it is important to be on than more than one of the main channels Source: Ofcom Research 52

82. Our analysis shows that the Channel 3 licences could face a deficit of £38-64m by 2012 53 Millions Ranges between higher and lower values based on current best estimates Cost Benefit of PSB status for the Channel 3 network Source: Ofcom

84. Including, but not be limited to, news on Channel 3

87. 57 A number of potential bidders have already emerged

88. A large number of stakeholders have responded to the DCMS consultation Majority expressed agreement that plurality in regional TV news is important and that commercial news providers are facing substantial pressures Many recognised that some form of additional funding may be required to sustain this Support for IFNCs as a mechanism to achieve this Some concerns raised: Commercial impact of public funding of regional news Proposed use of the licence fee for non-BBC services Impact of public funding on governance and impartiality of news Complexity of awards process 58

90. Local commercial radio sector under pressure

91. Small local TV sector

92. Local and regional newspaper closures

93. Limited visibility of community media sector

94. More localised, cross-media service

95. Reinvigorated and fit for digital age

96. New opportunities on DTT

97. A wide choice of content, available on traditional platforms and online

98. Thriving community media sectorAll underpinned by innovative, grass roots journalism

100. Government leading on-going work on IFNC pilots

101. Ofcom’s Statement with recommendations on Media Ownership Rules – to Secretary of State has been published

103. Digital Economy Bill 62 “The communications sector underpins everything Britain does as an economy and society. The rapid drive to digital technology is transforming how both businesses and people operate. And this digital revolution offers great opportunities. Not only does the digital economy contribute around eight per cent of our GDP, it is vital for the success of every other area of productivity. It is growing in significance as we plan for recovery from the economic downturn. The Government is committed to securing the UK’s position as one of the world’s leading digital knowledge economies. This Bill would put in place the necessary legislative measures to deliver the strategic vision set out in the Digital Britain White Paper.” http://www.commonsleader.gov.uk/output/page2920.asp

104. Digital Economy Bill (2) 63 “The purpose of the Bill is to: Strengthen the nation’s communications infrastructures, equipping the UK to compete and lead in the global digital economy. The main benefits of the Bill would be: Promoting a competitive digital communications infrastructure, through proposals on radio licensing, changes to Ofcom’s duties and spectrum modernisation. Providing essential support for creative industries in a digital world, through proposals on online copyright infringement and changes to copyright licensing. Improving digital security and safety, by putting in place a classification system for boxed video games that meets the needs of parents and children. Securing public service content in a rapidly changing broadcasting landscape, through action on the provision of news in the nations, regionally and locally, updating Channel 4 Corporation’s functions and future-proofing the Channel 3 and 5 licences.”

106. Support the plurality of independent and high quality news in the Nations, locally and in the regions – giving Ofcom powers to appoint and fund Independently Funded News Consortia.

108. Digital radio - updating the regulatory framework to make moves to digital switchover for radio possible by 2015.

109. Channel 4 Corporation – updating its functions to encompass public service content on all media platforms - online as well as television.

111. 67 6: Broadcasting Code

112. How you may have heard of us

113. 69 Case Studies Gordon Ramsay's Great British Nightmare, Channel 4 Casualty, BBC1 Breakfast Show, Kiss FM Katie and Peter, ITV2 Sumo TV

114. Thank you for listening damian.radcliffe@ofcom.org.uk 70